Thursday, May 2, 2013

Get Ready To Bend Over. Again

Obamacare’s Tax Hike Train
Wreck

The
most destructive Obamacare tax increases are just around the bend

Asked
about Senator Max Baucus’s (D-Mont.) recent “train wreck” comments, President
Obama today said, “A huge chunk of it [Obamacare] has already been
implemented.” Unmentioned was the wave of destructive Obamacare tax increases
that will begin to hit Americans during the next tax filing season and
beyond:

Starting in tax year
2013:

Obamacare Surtax on
Investment Income: A new, 3.8 percent surtax on
investment income earned in households making at least $250,000 ($200,000
single). This tax hike results in the following top tax rates on investment income:

Capital Gains

Dividends

Other*

2013+

23.8%

43.4%

43.4%

*Other
unearned income includes (for surtax purposes) gross income from interest,
annuities, royalties, net rents, and passive income in partnerships and
Subchapter-S corporations. It does not include municipal bond interest or
life insurance proceeds, since those do not add to gross income. It does
not include active trade or business income, fair market value sales of
ownership in pass-through entities, or distributions from retirement plans.
(Bill: Reconciliation Act; Page: 87-93)

Obamacare Medicare
Payroll Tax Increase:

First $200,000
($250,000 Married)
Employer/Employee

All Remaining Wages
Employer/Employee

Pre-Obamacare

1.45%/1.45%
2.9% self-employed

1.45%/1.45%
2.9% self employed

Obamacare

1.45%/1.45%
2.9% self-employed

1.45%/2.35%
3.8% self-employed

(Bill: PPACA, Reconciliation Act; Page: 2,000-2,003; 87-93)

Obamacare Medical
Device Tax: Medical device manufacturers employ 409,000
people in 12,000 plants across the country. Obamacare imposes a new 2.3 percent
excise tax on gross sales – even if the company does not earn a profit in a
given year. In addition to killing small business jobs and impacting
research and development budgets, this will make everything from pacemakers to
artificial hips more expensive. (Bill: PPACA; Page: 1,980-1,986)

Obamacare High Medical
Bills Tax: Before Obamacare, Americans facing high medical
expenses were allowed a deduction to the extent that those expenses exceeded
7.5 percent of adjusted gross income (AGI). Obamacare now imposes a
threshold of 10 percent of AGI. Therefore, Obamacare not only makes it
more difficult to claim this deduction, it widens the net of taxable income.
According to the IRS,
10 million families took advantage of this tax deduction in 2009, the latest
year of available data. Almost all are middle class. The average taxpayer
claiming this deduction earned just over $53,000 annually. ATR estimates that
the average income tax increase for the average family claiming this tax
benefit will be $200 - $400 per year. To learn more about this tax, click here. (Bill: PPACA; Page: 1,994-1,995)

Obamacare Flexible
Spending Account Tax: The 30 - 35 million Americans who
use a pre-tax Flexible Spending Account (FSA) at work to pay for their family’s
basic medical needs face a new Obamacare cap of $2,500. This will squeeze $13
billion of tax money from Americans over the next ten years. (Before Obamacare,
the accounts were unlimited under federal law, though employers were allowed to
set a cap.) Now, a parent looking to sock away extra money to pay for braces
will find themselves quickly hitting this new cap, meaning they would have to
pony up some or all of the cost with after-tax dollars.
Needless to say, this tax will especially impact middle class families.

There is one group of
FSA owners for whom this new cap will be particularly cruel and onerous:
parents of special needs children. Nationwide there are several million
families with special needs children and many of them use FSAs to pay for
special needs education. Tuition rates at one leading school that teaches
special needs children in Washington, D.C. (National Child Research Center) can
easily exceed $14,000 per year. Under tax rules, FSA dollars can be used to pay
for this type of special needs education. This Obamacare tax provision will
limit the options available to these families. (Bill: PPACA; Page: 2,388-2,389)

Starting in tax year
2014:

Obamacare Individual
Mandate Non-Compliance Tax: Starting in 2014, anyone not
buying “qualifying” health insurance – as defined by President Obama’s
Department of Health and Human Services -- must pay an income surtax to the
IRS. The Congressional Budget Office recently estimated that six million American families will be liable for the tax,
and as pointed out by the Associated Press: “Most would be in the middle class.”
In addition, 100 percent of Americans filing a tax return (140 million filers)
will be forced to submit paperwork to the IRS showing they either
had “qualifying” health insurance for every month of the tax year or they
obtained an exemption to the mandate.

Americans liable for the surtax will pay according to the following schedule

1 Adult

2 Adults

3+ Adults

2014

1%AGI/$95

1%AGI/$190

1%AGI/$285

2015

2%AGI/$325

2%AGI/$650

2%AGI/$975

2016

2.5%AGI/$695

2.5%AGI/$1390

2.5%AGI/$2085

(Bill: PPACA; Page: 317-337)

Obamacare Employer
Mandate Tax: If an employer does not offer health
coverage, and at least one employee qualifies for a health tax credit, the
employer must pay an additional non-deductible tax of $2,000 for all full-time
employees. This provision applies to all employers with 50 or more
employees. If any employee actually receives coverage through the exchange, the
penalty on the employer for that employee rises to $3,000. If the employer
requires a waiting period to enroll in coverage of 30-60 days, there is a $400
tax per employee ($600 if the period is 60 days or longer). (Bill: PPACA; Page:
345-346)

Obamacare Tax on
Health Insurers: Annual tax on the industry imposed
relative to health insurance premiums collected that year. The tax phases
in gradually until 2018. Fully imposed on firms with $50 million in
profits. (Bill: PPACA; Page: 1,986-1,993)

Starting in tax year
2018:

Obamacare Tax on Union
Member and Early Retiree Health Insurance Plans:
Obamacare imposes a new 40 percent excise tax on high cost or “Cadillac” health
insurance plans, effective in 2018. This tax increase will most directly affect
union families and early retirees, who are likely to be covered by such plans.
This Obamacare tax will be levied on insurance policies whose premiums exceed
$10,200 for an individual and $27,500 for a family. Middle class union
members tend to be covered by such plans in states like Ohio, Pennsylvania,
Wisconsin, and Michigan. Higher threshold ($11,500 single/$29,450 family)
for early retirees and high-risk professions. CPI +1 percentage point indexed.
(Bill: PPACA; Page: 1,941-1,956)